Daily Market Update

Dollar Strong on Retail Sales; Euro Falls on ECB

June 14, 2018

After experiencing wild swings yesterday afternoon, the trend continued for the U.S. dollar overnight.

USD

The greenback initially gained yesterday after the Federal Reserve announced it was raising interest rates by a quarter of a point. While the move was already priced in, the so-called “dot plot” showed that policy makers now expect four interest rate hikes this year (two additional), up from three at the previous dot-plot release. The greenback quickly gave up its gains when Fed Chairman Powell began his press conference thirty minutes later. Despite a “hawkish” rate hike and fairly bullish comments from Powell, the greenback closed the day mostly where it started.

The U.S. dollar is attempting to make gains this morning but mostly based on news abroad. (See Euro section below.) The Australian dollar is a notable underperformer following weak domestic jobs data and poor Chinese retail sales.

The U.S. dollar is attempting to make gains this morning but mostly based on news abroad. (See Euro section below.) The Australian dollar is a notable underperformer following weak domestic jobs data and poor Chinese retail sales.

The U.S. dollar is attempting to make gains this morning but mostly based on news abroad. (See Euro section below.) The Australian dollar is a notable underperformer following weak domestic jobs data and poor Chinese retail sales.

 

EUR

EUR/USD has been a whipsaw over the past day following the conclusion of policy meetings by the Federal Reserve and the European Central Bank. After recovering yesterday afternoon, the Euro is lower this morning and at a one-week low against the U.S. dollar. The European Central Bank indicated that they would end their bond purchasing program in December, which would seem like good news for the common currency. However, they also indicated that rates would be held steady until at least the summer of next year. The promise of low rates for another 12+ months on the backdrop of the U.S. Fed increasing their rate hike outlook has led to renewed Euro weakness.

ECB President Mario Draghi will begin his press conference any moment to explain the decision. More volatility is expected.

 

GBP

The British pound bucked the trend of U.S. dollar strength overnight following good data. British retail sales beat expectations in May, boosting the sterling. Overall sales rose 1.3%, besting the 0.3% forecasted by economists. The data is a welcome sight following disappointing trade and industrial production numbers earlier this week.

 

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